My Company

By Marlene Y. Satter

Assets under management globally reached record levels last year, with profits nearing all-time highs, according to a report from the Boston Consulting Group, but that’s no reason for asset managers to relax.

Global AUM last year rose for the second consecutive year, reaching a record $68.7 trillion at the end of 2013, a 13 percent bump, the firm noted in its report.

Profits came to $93 billion, delivering a 39-percent operating margin, 2 percentage points better than 2012. Pre-crisis, margins were at 41 percent — not so very much higher.

As Gary Shub, a Boston-based BCG partner and a coauthor of the report, said in a statement, “Asset management continues to rank among the most profitable industries.”

Yet the report also warned that this was no time to let down one’s guard.

Brent Beardsley, a Chicago-based BCG senior partner and another coauthor of the report, said the market “continues to shift away from traditional managers’ main business of actively managed core assets, eroding their asset share in the global pool.”

Most of the asset growth last year resulted thanks to rising equity markets and not to inflows, reinforcing Beardsley’s point.

Net new flows were only 1.6 percent of 2013’s AUM, far below the peak of 5.7 percent seen in 2006.

Moreover, many of those dollars were directed into specialties, solutions and nontraditional asset classes. That ties in with a drop in traditional assets, which have fallen from a 2008 level of 56 percent to less than half of the global total at 45 percent. As a result, warned the report, “Managers that cling exclusively to traditional assets will continue to be squeezed.”

Regionally, the highest AUM was in North America at $34 trillion as of the end of 2013. That’s an increase of 16 percent over 2012. Europe followed at $19.3 trillion, an increase of 7 percent.

Australia and Japan, between them, rose 18 percent to $6.2 trillion, while the rest of Asia was up 14 percent at $4.4 trillion. Africa and the Middle East challenged Australia and Japan for growth, tying their 18 percent, although the dollar amount was considerably smaller at $1.4 trillion.

The $1.7 trillion making up the balance of the total was not attributable to a country or a region.